Aircraft leasing funds gain adherents as investors turn to alternatives

Lauren Eldershaw
By Lauren Eldershaw March 26, 2019 15:25

Aircraft leasing funds gain adherents as investors turn to alternatives

Matthew Vincent penned an interested article in this morning’s Financial Times on the attraction of alternative investments in a more volatile trading environment for equities and bonds. Aircraft leasing funds were lumped in there as a potential alternative along with biopharma investments and other asset-backed lending. Turning to alternatives when traditional markets get choppy makes sense as a hedge for conservative investors but many fund managers remember the 2008 crisis when they were unable to exit many alternative holdings as well as stocks and bonds, which is why precious metals remain a low risk park for funds in such an environment. Interest in aircraft leasing investment, be they funds or otherwise, are increasing steadily but as the cycle turns and we start to see more airline casualties, it is imperative that leasing companies bolster their repossession and remarketing capabilities to maintain returns and maintain confidence in the sector for it to remain a safer option in a recessionary business cycle. It is also essential that the industry resolves the 737 Max 8 crisis as quickly and efficiently as possible to increase confidence in the broader aviation sector.

Meanwhile, yesterday a report was issued in the UK that ranked the top professions at risk from being wiped out by automation – bar and waiting staff were number one, but what about pilots? This report came out on the same day that a BA aircraft, operated by charter company, WDL Aviation, accidentally flew to Edinburgh rather than Dusseldorf from London City airport because it filed a previous flight plan. Maybe this is something artificial intelligence would have picked up on. Human error is an oft-cited key statistic for air accidents. Removing the human element many say has a multitude of benefits – reducing costs and increasing airplane efficiency, e.g. without the need for a cockpit, some argue aircraft could be redesigned to be more aerodynamic. The debate over pilotless planes has been running for some time now with many of the opinion that first one pilot and then pilotless aircraft will likely be trialled in the cargo market first. However, as more details emerge that the quick actions of pilots overriding onboard software saved further fatal crashes, it could be argued that the case for pilotless planes is looking further away than ever. But the global shortage of pilots, the need for greater efficiency and desire to eliminate human error, will keep the debate raging for the foreseeable future.

Lauren Eldershaw
By Lauren Eldershaw March 26, 2019 15:25